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Twitter investor sues Elon Musk for failing to properly disclose shares

Elon Musk, the world's richest man, is being sued over allegations of not properly disclosing his purchase of Twitter shares. NASA File Photo by Bill Ingalls/UPI
Elon Musk, the world's richest man, is being sued over allegations of not properly disclosing his purchase of Twitter shares. NASA File Photo by Bill Ingalls/UPI | License Photo

April 13 (UPI) -- A Twitter shareholder has filed a lawsuit against Tesla and SpaceX CEO Elon Musk over his failure to disclose his ownership stake in the social media platform, saying it cost shareholders blind to his investment money while the world's richest man was able to purchase artificially cheapened options.

Musk, who currently owns 9.2% of the social platform's stocks, started buying Twitter shares in January, accumulating a more than 5% stake in the company by March 24 and a 9.2%, or more than 73.4 million shares of Twitter, by April 4.

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In the federal security class action lawsuit filed by Marc Bain Rasella on Tuesday and obtained by NPR argues Musk is liable for losses incurred by Twitter investors who sold their stocks between his acquisition of a 5% stake in the company and his disclosure of ownership.

In the lawsuit, Rasella on behalf of other unknown plaintiffs states Musk was required under a Security and Exchange Commission rule to file a Schedule 13 form to disclose his ownership of Twitter within 10 days of surpassing 5% stock ownership.

However, Musk only filed the required form on April 4 -- a revelation that caused the price of Twitter stock to sore 27% to $49.97 from $39.31 three days earlier.

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In the court document, Rasella argues that Twitter investors who sold stock between March 24 and April 4 were cheated out of information due to false statements made by Musk that not only cost them money but allowed him to purchase more Twitter stock at a devalued price, saving him some $143 million.

"Defendant Musk is liable for the false statements," the documents states.

Rasella is asking the court to award him and others who sold stock unaware of Musk's ownership compensation and punitive damages as well as legal costs and expenses.

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